Financial and insurance services industry

How businesses operate

Many businesses in this industry:

• earn money from fees, commissions or both
• collect and manage personal and financial details
• spend time keeping records and meeting legal obligations
• operate on their own or partner with another business for support. For example, a mortgage aggregator can help mortgage brokers access lenders, technology, training and compliance support.

Demand and competition

Many businesses rely on referrals, repeat clients and business contacts to attract work.

Businesses often compete with local businesses, large banks and other providers offering similar products and services.

Demand can change when people’s confidence in their finances change. For example, demand may fall when people worry about keeping their job, inflation or rising household costs.

Interest rate changes can affect demand for some services, such as mortgage broking.

Digital tools

Many businesses use digital tools to manage daily work, staff, clients and records. These tools can keep track of work, but they can also introduce risks, such as cyber threats.

Common tools include:

• customer relationship management (CRM) systems to manage client details and contacts
• lending software for processing and tracking loans
• financial planning software to prepare advice and model financial scenarios
• online client portals for clients to lodge documents, update details and track progress.

Risks and challenges

Common challenges include:

• keeping up to date with industry and regulatory changes
• identifying and dealing with fraud and scams, such as people pretending to be your business and investment scams
• staying informed about new lending, insurance and investment products, and changes to existing ones
• building trust with clients and maintaining strong relationships.

Knowing which business risks affect you can help you plan and manage your business.

Industry statistics

Data can help you understand how businesses in this industry perform and how your business compares.

You can:

• explore annual estimates of industry income, costs, profit and capital expenditure at the Australian Bureau of Statistics
• compare your business's performance against similar ones using the Australian Taxation Office's small business benchmarks
• get the latest job market trends and insights at Jobs and Skills Australia
• explore banking, insurance and superannuation industry statistics at the Australian Prudential Regulation Authority (APRA).

It’s important you are aware of the laws that apply to the financial and insurance services industry, including:

• Competition and fair trading laws are set out in the Competition and Consumer Act 2010.
• Rules about pricing, refunds, contracts and advertising are set out in Australian Consumer Law (ACL).
• The Privacy Act 1988 may apply if you collect personal details about customers or clients.
• Companies and Australian financial services (AFS) licensees must comply with the Corporations Act 2001.
• Some businesses have obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
• Financial advisers must follow professional standards, including the Financial Planners and Advisers Code of Ethics 2019.
• The National Consumer Credit Protection Act 2009 sets licensing and responsible lending rules for consumer credit businesses.
• The National Credit Code sets rules for some consumer credit contracts.

Codes of practice

Industry peak bodies have developed codes of practice. For example:

• General Insurance Code of Practice
• Insurance Brokers Code of Practice
• Life Insurance Code of Practice.

Industry codes help set high service standards, promote ethical behaviour and build consumer trust. Many codes are voluntary. However, if you sign up to a code, you must comply with its rules.

This industry has several government regulators. The regulators relevant to your business depend on the products and services you offer.

The Australian Securities and Investments Commission (ASIC) regulates financial services and consumer credit businesses. ASIC issues AFS licences and Australian credit licences to businesses such as financial advisers, mortgage brokers and insurance brokers.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) oversees compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws. Some businesses must register with AUSTRAC and meet reporting, customer identification and record-keeping obligations.

The Australian Prudential Regulation Authority (APRA) regulates banks, insurance companies and superannuation entities. Other businesses in the financial and insurance services industry are not regulated by APRA. However, some may still need to meet APRA reporting obligations.

Australian Government regulators issue most industry licences, registrations and approvals. Some business activities may also need state or territory licences or permits.

You may need licences and permits to:

• give financial advice
• offer credit services, such as mortgage broking
• sell financial products, such as insurance products
• manage investment funds.

Your tax obligations depend on your business structure and the products and services you offer.

Financial supplies – such as lending money, providing credit or selling shares – have special goods and services tax (GST) rules. These rules determine if you charge GST on a sale and can claim GST credits.

Some businesses have a registered enterprise agreement. If yours doesn’t, check if an award covers your employees.

Different awards apply to different roles. For example, a receptionist role may come under the clerks award. A financial planner may come under a different award or no award at all.

If your employee is not covered by an award or agreement, you can set their pay and conditions with an employment contract. These contracts must meet at least the national employment standards and minimum wage.

Businesses holding an AFS licence or Australian credit licence may need to:

• check that employees and contractors have the right qualifications and are competent to do their role
• complete reference checks
• make sure people keep their skills and knowledge up to date
• supervise the work of employees and contractors
• add some employee and contractor details to the financial advisers register.

AUSTRAC-regulated businesses must conduct due diligence and training for people in roles with AML/CTF functions.

All businesses have a duty of care under work health and safety (WHS) laws. They must take reasonable steps to keep workers, customers and the public safe.

Businesses in this industry often operate in office environments. WHS hazards in this industry can include:

• poor workstation set up
• sitting for long periods of time
• psychosocial hazards, such as violence or aggression in customer-facing roles.